The BSA/AML Interagency Exam manual addresses lending within its coverage and a key examiner focus is the following: “Assess the adequacy of the bank’s systems to manage the risks associated with lending activities, and management’s ability to implement effective due diligence, monitoring, and reporting systems.” Lending activities include, but are not limited to, residential and commercial real estate, secured commercial loans, credit cards, consumer, commercial, and agricultural loans. Lending activities can include multiple parties (e.g., guarantors, signatories, principals, or loan participants). The new 5th Pillar CDD rule takes particular aim at commercial lending and turns implied guidance into express regulations. The BSA considers all loans, whether they be residential, commercial, consumer, etc to be “accounts” and subject to the CIP requirements and applicable to SAR and CTR reporting.
A number of the BSA examiners “grew up” in the Safety and Soundness world and are particularly adept in identifying BSA-related deficiencies in the commercial lending area and therefore find lax controls in the commercial lending area because some commercial lenders believe that the BSA is a compliance regulation and doesn’t apply to commercial loans. Additionally, many banks still have BSA training programs primarily tailored to consumer deposit accounts and do not provide sufficient training for lending-related situations.
This two-hour program will assist your bank in determining whether your BSA Compliance Program adequately includes controls, such as training, policies and procedures, monitoring, etc for loan products in addition to deposit products. It will also teach you how to conduct due diligence on related account parties (i.e., guarantors, signatories, or principals) as well as beneficial owners.
Covered Topics Include:
- Commercial and residential mortgage loan money laundering schemes identified by FinCEN through a 10-year study of SARs;
- Lending Red Flags, including those addressed in the BSA Exam Manual and many more
- Customer Due Diligence (CDD) and, Enhanced Due Diligence (EDD) expectations regarding loans;
- Beneficial Ownership identification and verification requirements for Legal Entity Customers;
- How to develop customer risk profiles and conduct ongoing risk-based monitoring for loan products;
- SAR and CTR reporting requirements; and
- Portions of your BSA Policy/Program that need to address lending.
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